Doing the lottery’s work

Retailers gear up for sales.

As the Arkansas Lottery takes shape, a lot of details are still in the air, especially for retailers. Some are anxious to start selling tickets and bringing customers into their stores, but others fear that lottery sales will create logistical or security problems.

Ticket sales could mean big business. Lottery director Ernie Passailaigue says the big incentive for stores to become lottery retailers is that lottery tickets will get customers to come in from the gas pump and buy tickets and other goods. That's good news for owners who often see customers pay at the pump and drive off, but it does come at a price.

Retailers have to pay for an initial application fee ($100, plus $25 for each additional location) and a yearly “fidelity fee” (up to $100 per location) and must take out a bond, which amounts to an insurance policy to cover any losses. They also have to deal with the extra traffic, sell the tickets and keep track of the money.

There is an added financial incentive for retailers to participate, however — a commission on ticket sales and prizes paid out to winners. According to the retailer rules set forth by the Lottery Commission, retailers will receive 5 percent of each dollar sold, 1 percent of each dollar redeemed and 1 percent of the prize amount on each winning ticket of $10,000 or more (not to exceed $25,000). Retailers are required to pay prizes up to $500.

Some store owners are eager to get started. Others are not so sure. Only 430 retail locations have sent applications to the commission so far.

Branch Satterfield is the president of Satterfield Oil Co. He owns four stores in Faulkner County and says they'll begin selling tickets as soon as they're available. The competition, he says, will demand it.

“If you're going to have gasoline and cigarettes then you're probably going to have to have lottery tickets because that's just one more product that people can easily get somewhere else,” Satterfield says.

Joe White, who is both a lottery commissioner and a convenience store owner, says the financial benefit from ticket sales will probably overcome any reservations retailers may have.

White is prohibited by law from selling tickets, something he says “certainly won't help” his business, but he plans on becoming a lottery retailer as soon as his time on the commission is up in six years. He says the response from his colleagues in the convenience store business has been mostly positive.

“I have not heard from anyone that has said ‘absolutely not,' ” White says. “I'm sure there will be stores that will not do it, because, realistically, you'll be making about 6.5 percent on commission from tickets but that will be competing with other things that you sell.”

One liquor store owner, who asked to remain unidentified, said selling tickets will be more of a hassle than it's worth.

“I don't want people coming in and clogging up my register, scratching tickets off on my counter or hanging around waiting for the numbers to come out,” he says. “More than that, I don't want somebody to know that I've got enough money to pay off a $500 prize or two. If they want to rob somebody, they're going to rob a store that's selling lottery tickets.”

White says that while he can sympathize with that point of view, he doesn't believe ticket sales should create a security concern.

“I have visited other states and spoken with their lottery people and their retailers and they have not said that was a problem,” he says. “In Tennessee the retailers that I talked to did not feel threatened by having to pay out those prizes.”

Satterfield says that security won't be a problem in his stores, but he hopes there are safeguards in place in case lottery tickets are stolen from retailers.

Kevin McCarthy, the lottery's director of training, specializes in retailer relations. He says there are safeguards in place to track down stolen tickets and retailers won't be held responsible in the event of a theft. Packages and tickets are individually numbered and can be taken out of active status if reported stolen.

“If for any reason a problem occurs with that pack of tickets, then all the retailer has to do is call a 24-hour hotline to take those tickets out of active status. Those tickets would be dead by the time anybody tried to present them for payment,” McCarthy says.

Once the contracts have been awarded to scratch-off and on-line vendors, a series of retailer training sessions will be held across the state. McCarthy says ideally, these day-long, trade-show-style sessions will take place shortly before the launch date, now set for Sept. 28 for at least some of the games.

Satterfield says he doesn't really know what to expect from lottery sales. But whatever it is, he says they will be prepared.

“There are just a lot of unknowns at this point,” he says. “I don't think it's going to be mass chaos, but I don't think it's going to be business as usual either. Right now, we'll probably have an extra person on staff until we get a feel for it.”